Coal firms agree to settle $123m debts
Leony Aurora, The Jakarta Post, Jakarta
Eight coal producers, which are withholding royalties totaling over US$123 million, have agreed to settle their debts this year, an official at the Ministry of Energy and Mineral Resources says.
The coal mining firms, including big league players such as PT Arutmin Indonesia and PT Kaltim Prima Coal (KPC), as of the end of June have delayed payments of $118.58 million and Rp 45.16 billion ($4.63 million), said the ministry's Director General of Geology and Mineral Resources Simon Sembiring.
"They have agreed to pay half of what they owed this month and settle the rest of the debt this year," he said in a press conference on Wednesday.
The debts had accumulated since 2001, but the bulk of them were from the last 18 months, said Simon.
Coal mining companies are required to hand over 13.5 percent of their revenue to the government from their sale of coal to both domestic and overseas markets. The royalty is distributed between the central government and the provincial and regency administrations where the mine is located.
The companies have said that the payment was delayed as the government had not reimbursed some value-added taxes over the years.
"They can demand the tax refund from the (Ministry of Finance's) Directorate General of Tax, but they cannot delay payment of the royalty," said Simon.
If the firms continue to delay payment, the ministry would turn to the Ministry of Finance as the authority to determine the sanction, he added.
With output estimated to reach above 150 million tons this year, the coal sector is targeted to contribute Rp 3.6 trillion of non tax revenues to the state budget.
Next year, with an increase in production of 7 percent to 160 million tons and the estimated rise in global prices, the commodity is expected to extend Rp 4.5 trillion to the budget.
According to Simon, up to July 12, four companies have started paying part of the debts, amounting to $8.33 million and Rp 2.17 billion. KPC has given $6.33 million, PT Multi Harapan Utama (MHU) $2 million, PT Allied Indo Coal Rp 723 million and Baramarta Rp 1.44 billion.
"We hope not to see any delayed payments next year," he said.
Simon also said that the ministry had canceled its previous plan to terminate MHU's contract, as the small coal miner has started to pay its debts. "We will give them some time," he added.
Coal prices have climbed in the past year as demand from energy-hungry China continues to rise and soaring oil prices prompted countries to look for an alternative fuel.
Indonesia produced some 131 million tons of coal last year, of which about 70 percent was exported to Japan, Taiwan, South Korea, India and China.